The government alleged that the defendants submitted false cost reports that concealed a financial relationship between the home health care provider and its management company. Had the cost reports disclosed that the management company was a related entity, that would have lowered the Medicare reimbursement for the management company’s services.
Among the factors cited as evidence of the relationship, the government alleged that principals of the management company:
- exerted significant control over the home health agencies;
- facilitated the purchase of the home health care agencies;
- made loans worth millions of dollars from companies they owned to the home health agencies;
- made cash transfers for millions of dollars from the management company to the home health agencies; and
- had day to day control over the home health agencies’ operations.
The government also alleged that the purported owner of the home health care agencies was merely a figurehead.
This is just the latest example of the government looking into substance over form. Even if you think that you have documented all the relationships properly to establish separate legal entities, the government will dig deep into your records to determine whether entities that do business together are related or truly independent.
New York, New York
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